October 13 Philippine Stock Market Daily Review:
Star of the Day: Metro Pacific
So what drove up the market this time…lower oil prices (still above $50’s), lower Peso, declining inflation perhaps?
Nah. Bargain hunting or technical bounce would be the most probable causes cited by your mainstream stock analysts. Yeah right. When the market goes down a slew of fundamentals are attached to it, when the market rises its all about charts. Such hokum. By the way, speaking of charts which is the more dominant trend, the recent 5 session decline or the 1-year and four months uptrend? So which should dictate the tempo of the market? Go figure.
Today’s market simply reflected the fickleness of our local investors. Haven’t you noticed the market was practically influenced by the movements of Metro Pacific? The Manny Pangilinan real estate-shipping holding company, a trader’s favorite, was initially sold down by its owner First Pacific, as earlier disclosed, that sent shockwaves throughout the market. By the early goings as MPC plumbed to its lows at 35 cents the Phisix and the general market was likewise down. As First Pacific ended its sales, the stock zoomed and recouped its losses to even closed higher (+2.17%)! In the same manner the Phisix closed higher by 5.82 points or .33%. Metro Pacific’s share of the day’s market activities was at an astounding 52.7%. Another noteworthy detail of today’s MPC-led market was that in spite of the selling of First Pacific, MPC recorded the largest foreign inflow of P 286 million!!! Puzzling is it? With deteriorating fundamentals MPC has managed to generate excitement from foreigner/s for a possible turnaround. As technical analyst Ron Nathan of the Philippine Daily Inquirer says “MPC has a checkered history and its book value is only P0.01 because it had to dispose of nearly all its assets to pay off its debts.” And to consider that primary reason behind the First Pacific sales was that the proceeds were meant for the “general corporate requirements” of Metro Pacific. For a company dependent on selling its equity to finance its operations does not indicate or augur for a turnaround stock. Well, as Mr. Nathan tersely explains the market is “PINNING THEIR HOPES (emphasis mine) that Manny Pangilinan will resuscitate the company as he did with PLTL.” Could it be that the foreign buying came from MVP’s group…Buy at 40’s and dump at 50’s?
Now of course, the market has paused from the recent selloffs? Could this be a ‘dead cat’s bounce’ or a recovery at work? Chart indicators show of more room for declines and could indicate that today’s action was a mere reprieve. Although your prudent investor-analyst, being a trendist, will stick to the latter view of a recovery.
What I am looking at is Thursday’s US current account data. With oil averaging $45 for the month of August I expect the unexpected, a record blowout deficit in the $60+ billion levels, as written in my latest newsletter. The consensus estimates is at the record $55 billion. If the macro data proves our forecast right, that the deficit swells to a new record level, then you would most likely see the US dollar fall hard. And if this happens you may expect accelerated buying from foreign money on our local stocks. This means that foreigners may provide the stimulus to buy up local stocks on Friday. Watch for it.
Star of the Day: Metro Pacific
So what drove up the market this time…lower oil prices (still above $50’s), lower Peso, declining inflation perhaps?
Nah. Bargain hunting or technical bounce would be the most probable causes cited by your mainstream stock analysts. Yeah right. When the market goes down a slew of fundamentals are attached to it, when the market rises its all about charts. Such hokum. By the way, speaking of charts which is the more dominant trend, the recent 5 session decline or the 1-year and four months uptrend? So which should dictate the tempo of the market? Go figure.
Today’s market simply reflected the fickleness of our local investors. Haven’t you noticed the market was practically influenced by the movements of Metro Pacific? The Manny Pangilinan real estate-shipping holding company, a trader’s favorite, was initially sold down by its owner First Pacific, as earlier disclosed, that sent shockwaves throughout the market. By the early goings as MPC plumbed to its lows at 35 cents the Phisix and the general market was likewise down. As First Pacific ended its sales, the stock zoomed and recouped its losses to even closed higher (+2.17%)! In the same manner the Phisix closed higher by 5.82 points or .33%. Metro Pacific’s share of the day’s market activities was at an astounding 52.7%. Another noteworthy detail of today’s MPC-led market was that in spite of the selling of First Pacific, MPC recorded the largest foreign inflow of P 286 million!!! Puzzling is it? With deteriorating fundamentals MPC has managed to generate excitement from foreigner/s for a possible turnaround. As technical analyst Ron Nathan of the Philippine Daily Inquirer says “MPC has a checkered history and its book value is only P0.01 because it had to dispose of nearly all its assets to pay off its debts.” And to consider that primary reason behind the First Pacific sales was that the proceeds were meant for the “general corporate requirements” of Metro Pacific. For a company dependent on selling its equity to finance its operations does not indicate or augur for a turnaround stock. Well, as Mr. Nathan tersely explains the market is “PINNING THEIR HOPES (emphasis mine) that Manny Pangilinan will resuscitate the company as he did with PLTL.” Could it be that the foreign buying came from MVP’s group…Buy at 40’s and dump at 50’s?
Now of course, the market has paused from the recent selloffs? Could this be a ‘dead cat’s bounce’ or a recovery at work? Chart indicators show of more room for declines and could indicate that today’s action was a mere reprieve. Although your prudent investor-analyst, being a trendist, will stick to the latter view of a recovery.
What I am looking at is Thursday’s US current account data. With oil averaging $45 for the month of August I expect the unexpected, a record blowout deficit in the $60+ billion levels, as written in my latest newsletter. The consensus estimates is at the record $55 billion. If the macro data proves our forecast right, that the deficit swells to a new record level, then you would most likely see the US dollar fall hard. And if this happens you may expect accelerated buying from foreign money on our local stocks. This means that foreigners may provide the stimulus to buy up local stocks on Friday. Watch for it.
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